Binaural interaction (BI) in brainstem auditory evoked response (BAER) were examined in normal term neonates. The BI components coincided consistently with the latency range of BAER wave IV through wave VII. Most BI components seen in the adults could be identified in the neonates, but the later components, i.e. those with longer latency, were underdeveloped in wave form. Wave DV was the most consistent and reproducible BI component. A marked difference between the neonatal and adult BI wave forms was that wave DVII was particularly small in the neonates. It appears that neuronal responses contributing to later BI components such as wave DVII are particularly immature at birth. Wave latencies and interpeak intervals were longer and amplitudes were smaller in the neonates than in the adults, which was associated with the differences between the neonates and adults in the BAER components. Changes in the BI components with stimulus intensity and rate in the neonates were fundamentally similar to but more significant compared with those in the adults. These findings suggest that neural connections in human auditory brainstem subserving the BI are established at birth but, particularly at higher levels of the brainstem, are immature.